Weekly Trading Guide

Outlook is bearish for SBI stock

SBI (₹257.8)

 

SBI surged 5 per cent in the initial part of the week but failed to sustain higher. The stock reversed sharply lower from the week’s high of ₹278, giving up all its gains, and closed 2.7 per cent lower for the week. The ₹275-277 resistance band has held very well. The outlook is bearish. The resistance in the ₹263-265 region is likely to cap the upside. An intermediate bounce to this resistance zone is likely to find fresh sellers coming into the market. Near-term support is at ₹254. A break below this can drag the stock lower to ₹245. The bearish outlook will be negated only if SBI breaks above ₹265 decisively. Such a break can take the stock higher to ₹275 and ₹277. However, the outlook will turn positive only if the stock snaps above ₹277, which seems unlikely now. Traders who have taken short positions at ₹273 and ₹276 can hold them with a revised stop-loss at ₹267. Move the stop-loss to ₹263 as soon as the stock moves down to ₹252. Book profits at ₹245.

ITC hovers above crucial support zone

ITC (₹277.1)

ITC plummeted over 6 per cent last week, breaking below the key support level of ₹290. It is now hovering above the key ₹274-273 support zone. The price action in the coming days will need a close watch. Whether ITC declines below ₹273 or not will be key in deciding the next move. If ITC bounces back from this support region, a relief rally to ₹285 or ₹287 is likely in the near term. A decisive break above ₹287 will ease the downside pressure. But such a strong up-move looks less probable at the moment. If the stock breaks below ₹273, it can decline to ₹269. A further break below ₹269 will increase the likelihood of the stock tumbling to ₹260 or even ₹255. Medium-term traders who have taken long positions at ₹298 and ₹293 can hold them. Retain the stop-loss at ₹270. But look to exit this trade and book losses if a relief rally to ₹285-287 is seen this week. Long-term investors can hold the long positions and accumulate at ₹274. Retain the stop-loss at ₹265.

Outlook remains unclear for Infosys

Infosys (₹721.8)

It was a volatile week for Infosys. The stock surged over 3 per cent in the initial part of the week and fell sharply, giving up all the gains to touch a low of ₹702.9. But it bounced back in the final trading day to close 0.8 per cent lower for the week. The outlook remains unclear. Key support is in the ₹700-₹690 region and resistance is in the ₹745-755 zone. The stock has been range-bound between these support and resistance bands over the last few weeks. A breakout on either side of ₹690 or ₹755 will determine the next move. A strong break above ₹755 will see the stock rallying to ₹765 and ₹770. But if Infosys declines below ₹690, it will come under renewed pressure. Such a break will drag the stock lower to ₹660. This move could be swift on the back of profit-booking. It will also confirm that the uptrend that has been in place since August 2017 has reversed. A further break below ₹660 will then increase the likelihood of the stock extending its down-move to ₹630 and ₹625.

RIL tumbles below long-term support

RIL (₹1,049.8)

RIL witnessed a free fall last week. The stock tumbled over 16 per cent, crashing below the crucial long-term support level of ₹1,180. The sharp drop wiped out the gains of the last couple of months. Immediate support is at ₹1,046. If RIL recovers from this support, a relief rally to ₹1,100 is possible in the near term. But an inability to breach ₹1,100 can drag the stock lower to ₹1,050 and ₹1,045 again. In such a scenario, a range-bound move between ₹1,045 and ₹1,100 can be seen for some time. If the stock manages to breach ₹1,100 decisively, the corrective rally can then extend to ₹1,150 or even ₹1,200. But last week’s steep fall leaves little possibility of the stock rallying decisively beyond ₹1,100 in the coming days. On the other hand, if RIL dips below ₹1,1045, the stock can fall to ₹1,015, the 200-day moving average support, or even to the psychological level of ₹1,000. A further break below ₹1,000 will then increase the likelihood of the stock tumbling to ₹950.

Tata Steel can test key near-term support

Tata Steel (₹569.5)

Tata Steel fell for the second consecutive week. The stock declined 2 per cent last week, triggering the stop-loss on long positions. A dip to test the ₹555 — the 100-week moving average — and ₹550 — a trend line support — is likely in the near term. If Tata Steel snaps back from the ₹555-550 support zone, a relief rally to ₹575 or ₹580 is possible. An inability to breach ₹580 can drag the stock lower to ₹550 levels again. In such a scenario, a range-bound move between ₹550 and ₹580 can be seen for some time. On the other hand, if Tata Steel breaks below ₹550, it can extend its down-move to ₹540. A further break below ₹540 will then increase the likelihood of the stock tumbling to ₹500 levels. The bearish outlook will get negated only if the stock decisively breaches the ₹580-585 resistance zone. In such a scenario, Tata Steel can gain fresh bullish momentum. It will also increase the possibility of the stock revisiting ₹600 and ₹610.

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